Only donations to qualified 501(c)(3) organizations are tax deductible and if a single contribution is $250 or more, there must be contemporaneous acknowledgment from the charity, meaning it must be in the taxpayer's possession by the due date of the tax return. Many charities still neglect to issue a required acknowledgment.
Take the recent case of Gomez v. Commissioner, T.C. Summary Opinion 2008-93. In this case, the taxpayer wrote 10 checks to the church totaling $6,100, each one over $250. He was audited, and he presented the cancelled checks as proof of the donations. Despite this, the IRS disallowed the donations because the taxpayer had not obtained a contemporaneous written acknowledgment from the church as required under IRC §170(f)(8). He got the acknowledgment at the time of trial, but it was too late. The Tax Court upheld the disallowance. So, even though the taxpayer had absolute proof of his donations, they were disallowed because he had not satisfied the substantiation requirements.
The acknowledgment must state the value, if any, of the goods or services the donor received in exchange for the donation. Most charities now include a statement, "No goods or services were provided in exchange for the donation."
And cash donation is generally not tax deductible. The taxpayer must have some documentation to support all donations claimed.
